The expression collapsing margins means that adjoining margins (no non-empty content, padding or border areas or clearance separate them) of two or more boxes (which may be next to one another or nested) combine to form a single margin. In CSS 2.1, horizontal margins never collapse.
Margins do not collapse outside block formatting contexts.
In IE 6 and 7, elements that have a layout do not contain default vertical margins (they do prevent explicit margins from collapsing though).
Style the yellow box with:
overflow: visible; display: inline-block; width: 100%